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A new procurement has been announced for the development of the 1st stage of the Tobacco Factory Quarter


SJSC “State Real Estate” (SRE) announces a new procurement for the construction works of the 1st stage of the Tobacco Factory Quarter, as the current two bidders - JSC “UPB” and LLC “Pillar Contractor” have refused to implement the plan due to the rapidly rising prices of construction materials, significant increase in the costs of the energy resources and inflation.

In the procurement announced this year for the development of the 1st stage of the Tobacco Factory Quarter in June, a record number of applications were received - 17 applications from construction contractors. At the beginning of September, JSC “UPB” was recognised as the winner of the procurement with an agreement price of 3,536,369 euros excluding VAT, but on 20 September, after re-evaluating its estimate, the contractor waived the right to enter into an agreement for the implementation of the plan. LLC “Pillar Contractor” was identified as the next bidder to be awarded the agreement as a result of the procurement, which submitted a tender for 3,658,582 euros excluding VAT. However, on 14 October, this bidder also refused to enter into an agreement, citing the rapid increase in the cost of construction materials and energy resources, which could not have been predicted in advance, as well as inflation, which would have a direct impact on the further increase in construction material costs.

Pursuant to the laws and regulations of public procurement, which stipulate that in cases when two bidders who have been granted the right to enter into an agreement for the implementation of a construction intention have refused to do so, the procurement commission decides to terminate the procurement procedure without selecting any offer and announces a repeated procurement. In the new procurement, the performance term of construction works is 18 calendar months from the day of concluding the procurement agreement.

 “The experienced rise in prices of construction materials and changes are happening rapidly, the issue of indexation of material price increases in agreements is becoming urgent at the industry level, as well as the topic related to the availability of qualified labour force. We follow the situation in the construction sector and are ready for the updated development of procurement requirements in projects where this must be done objectively due to public procurement regulations. At present, there are no indications that it would be necessary to make cardinal changes to the procurement process of construction works - the execution of state construction orders and the progress of projects are generally successful,” points out Renārs Griškevičs, Chairman of the Board of SRE.

According to the vision of the architect’s bureau NRJA, developed and approved at the end of 2018 in the design competition, the construction plan envisages the development of the territory of the Miera Street Tobacco Factory Quarter in several stages. The development of the quarter will start with the entrance junction - the Creative Industries Incubator and the National Film School of the Latvian Academy of Culture, as well as the construction of a separate filming pavilion, renovating and improving the public space in an area of 1,019 m2 and public buildings in an area of 1,667 m2. In the first stage of the quarter's development, the buildings where the New Riga Theatre is currently located will not be affected. In the 2nd stage of development of the Tobacco Factory Quarter on Miera iela, it is planned to develop premises for the Latvian Academy of Culture in an area of more than 8,000 m2, creating premises for the provision of the study process of the study programmes, including the study programmes “Contemporary Dance” and “Performing Arts” and the Cinema/Photo Museum (Riga Cinema Museum, Latvian Museum of Photography).

Under the leadership of SRE, work is currently underway on 54 nationally significant construction objects with a total project budget of more than 193 million euros. As, for example, in the construction tender announced in February for the establishment of the SJSC “Latvian National Opera and Ballet“ decoration workshop and rehearsal hall complex at Meirānu iela 2, a construction agreement has been concluded with a construction contractor and works on the site will start soon. The restoration and reconstruction of the Riga Castle convent (kastel), the restoration of the New Riga Theatre building complex, the development of the Terehova border crossing point, the Daile Theatre forecourt renovation project, where construction works will soon begin, and the energy efficiency improvement project of the Valmiera Drama Theatre building will continue.

Last year, in the conditions of the pandemic, 17 nationally significant development projects with a total budget of 29.5 million euros were completed under the leadership of SRE. SRE provides professional real estate management and administration for approximately 400 real estate properties with 1100 buildings of 1.02 million square metres and more than 3600 land properties of 9.6 million square metres. This year the capital company is one of the 23 Latvian companies that have received the highest platinum award in the evaluation of the Sustainability Index of the Institute of Corporate Responsibility and Sustainability, confirming the good governance and sustainability of its operations. SRE was founded in 1996, it is 100% owned by the Ministry of Finance of the Republic of Latvia.